Our editor, Nathan Gore, spoke to Simon Bussy, Domain Director of Altus, about the benefits of AI/ML within the Wealth Management sector.
What would be your brief outline of the benefits that AI/ML can bring to the Wealth Management sector?
The successful firms will be those that demonstrate a willingness to collaborate with technology and recognise that AI – and in particular, machine learning – can help people make better, faster, cheaper decisions. In a world of smart-connectivity, AI is the key to harnessing the power of data, and to a long and sustainable future.
While currently AI is being used for very specific wealth management tasks – hedge fund management, robotic stock pickers, ‘robo’ investment algorithms, client service chatbots, document analysis, RegTech support – increasingly AI will be used to augment business strategy and planning, using the power of data analytics and simulations to help provide answers to critical business questions.
Over time, of course, deep learning AI will gradually replace humans at all levels, and increasingly this will include the more professional roles which involve significant data and number crunching. Transitions for people into new roles – often requiring a dramatically different skillset – will be a huge challenge. Some will get left behind – become unemployable. Others will rise to the challenge and re-train themselves, developing new skills and ways of thinking that can’t as yet be automated – creativity, unpredictability, uniqueness, story-telling – and will command better wages.
…or the general tech industry?
Although AI is typically ‘narrow’ or specialised in what it can currently do, it does so with an expertise and proficiency that can outsmart most humans. Often it can find new and better ways to do something, which then motivates humans to adjust their own way of thinking, and improve their own performance. We’ve witnessed this across a range of industries and sectors (e.g. health); so now imagine AI initiatives outsmarting the best tax experts, accountants or financial advisers and wealth managers by re-imagining key elements of the value chain to better optimise and deliver a whole range of different services. Altus consumer research clearly demonstrates that consumers still want to deal with a human, not just a robot, when managing their financial affairs; collaboration between digital and human will be key, and will produce the best results.
Do Startups have the upper hand when being able to take advantage of this new technology? If so, by how much?
Start-ups often tend to be more nimble and have more focus in solving challenges from a consumer perspective, and frequently are unconstrained – at least in the early days – by the standard metrics that drive large organisations. That said, once a technology begins to gain traction, the larger incumbents soon join the feeding frenzy, and this materialises in a number of ways:
- Partnerships with the start-up disruptors
- Acquisition of the start-ups
- Strategic investments into the disruptors
- Recruit from the start ups and self-build
- A mix of all the above!
Typically the incumbent brands have the deeper pockets, and if we look at AI specifically, we can see that it is the major global tech brands in the US and China which are scouring the globe for best startups, and raiding academia for the brightest talent. Companies will have to create an AI advantage to survive. The global tech giants already know this; any business serious about its long term future needs to recognise this too.
What do you see as being the next big advance for ‘robo-advisers’?
For too long we’ve seen ‘robo’ after ‘robo’ trot out the same dull, linear journey into an ISA or GIA. We all know that they struggle to engage and get traction, yet time and again we see the ‘next new thing’ do exactly the same! It’s lazy proposition development – the equivalent of developing the Sinclair ZX Spectrum…again! – and they get the rewards they deserve.
That said, where people are beginning to think through how they can seamlessly integrate the wide range of tech developments now available, how they can re-imagine the value chain, how they can use existing customer data (both behavioural and financial) to help consumers manage their money – all their money – better, that for me is progress. I particularly like working with intelligent people who have a healthy disregard for the status quo, who demonstrate a foresight and a willingness to respond – boldly – before it’s obvious they have to do so, and even if it means that sometimes they get it wrong. The coming together of biometrics, open banking, open APIs, IoT, data aggregation and analytics, 5G, faster payments, mobile… personal financial management will look very different in a few years from now.
Some organisations will create truly customer centric, value-adding propositions and will thrive and deliver vastly improved profits; others will, quite simply, try to hang on to the good ol’ days, be left behind… and die.
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